The main task of the Blue Ribbon Committee is to investigate in aid of legislation.Fact-finding which should lead to prosecution is the task of another body, theOmbudsman.

The Ombudsman released two Joint Resolutions, First, on the Administrative Case against Romulo Neri; and Second, on the Criminal Case finding probable cause against Benjamin Abalos and Romulo Neri for violation of Section 3 (h) of RA 30191 and against Benjamin Abalos for violating Article 2122 of the Revised Penal Code for Corruption of Public Officials. Curiously, not only the Ombudsman's Joint Resolutions are wanting in itsfindings, 90 % of the 'bases of 'the Resolutions are based on the Transcript ofStenographic Notes of these investigations and submissions given to this Committee.

The NBN-ZTE .controversy can be traced from the dinner in the DasmarinasHome of then Speaker Jose De Venecia, Jr. There, a Framework of Cooperation between the Govemment of the Republic of the Philippines and the People's Republic of China wasconceived,

Major items discussed and brought forward by both sides during the said meeting were:

1. A plan to hold an RP-China Business Economic Forum from May 24-27,2006. Conference will be hosted by the Philippine Secretary of Trade andIndustry, Secretary Peter Favila and his counterpart PROC Minister ofCommerce Bo Xilai.2. An objective to plan a business program for China to invest, and thePhilippines to develop business/economic and tourism opportunities totallingabout US$32-billion.

3. Areas of investment includes - a) Housing needs of the Philippines; b)Northrail Project; c) Investment in Nonoc Nickel Mines and Samar BauxiteMines; d) Public works and infra projects; e) Energy and Power Projects; f)Industrial Parks/economic zones; g) Tourism Projects; h) Agriculture Projects;i) Fisheries Projects and j) Textile Mill/Garment Factories.There is no mention of any Broadband deal during the meeting.

January 9, 2006 (meeting): Ambassador Li Jinjun at the residence of Speaker Jose de Venecia discusses highlight of a possible framework for economic cooperation between China and Philippines

March 1, 2006 (Framework of cooperation): letter of DTI Sec. Favila, NEDA Sec. Neri endorsed by Speaker de Venecia addressed to Ambassador

On June 5, 2006, the Government of the Republic of the Philippines (GRP)entered into a Memorandum of Understanding with the People's Republic of China(PROC) for the establishment of a Philippine-China Economic Partnership. Then NEDASecretary Romulo L. Neri and OTI Secretary Peter B. Favila signed for the Philippineswhile Minister of Commerce Bo Xilai signed for China. Please note that the MOU between the Philippines and China did not mention any Broadband network. It only mentioned an ICT-based education.

On July 12, 2006, another Memorandum of Understanding was executed-thistime between the Philippines and ZTE International Investment Limited (ZTE). Included in thatMemorandum of Understanding are provisions regarding investments in a nationwidegovernment broadband communication infrastructure project and the establishment of

an information technology school and training center. This is the first time that Broadband appears in an Agreement.

Terms of the Agreement between the Philippines and ZTE:

The capital and operating costs for the development and implementationof the Investment Projects, in the amount of US$4 Billion, shall be fundedand fully provided for by ZTE International. ZTE International shall providethe technical know-how and specialized technologies for the developmentand implementation of the Investment Projects. The GRP, particularly the OOF, OTI, OILG, OENR, DOTe, OBM, NEDA and all other Government Agencies and Offices, shall assist ZTE International in the development and implementation of the Investment Project.

July 24, 2006 President GMA in her SONA championed the Cyber Corridor Initiative of her government which will boost telecommunications technology and education.

On August 7, 2006, ZTE submitted with the Commission on Information and Communications Technology (CICT) their proposal for the NBN Project.

On October 10,2006, the unsolicited Build-Own-Operate (BOO) proposal of Amsterdam Holdings Inc. (AHI) was first submitted to National Economic Development Authority (NEDA) by its private proponent Mr. Jose de Venecia III as Chairperson of the Bandila Communications Holdings, Inc. in partnership with private Chinese enterprises and institutions. MEDA transmitted the proposal to DOTC Sec. Soneja. It is worth noting that Mr. Jose de Venecia Ill's unsolicited Build-Own-Operate(BOO) proposal of AHI was first submitted to NEDA and not to DOTC- the implementingagency.

October 17, 2006 NEDA Secretary Neri conveyed his support for AHI’s proposal for NBN without DOTC recommendation. This is contrary to his statement he submitted to the blue Ribbon committee

Octiber 23, 2006 CICT officially endorsed the NBN to NEDA as a government project, not as a Build-Operate- Transfer project.

October 29, 2006 Lozada, FG Mike Arrogo, PGMA, Speaker de venecia and COMELEC Chairman Abalos went to Hong Kong then crossed to border to Shenshen. They then after had lunch with ZTE officials. PRC Ambassador Li Junjun informed the government of the Phiippines that their government will finance the project and designate ZTE as prime contractor. This is pursuant to an appeal submitted by the GRP to China to finance the project.

December 2006 Jose de venecia III alleges that then COMELEC Chairman Abalos offered a technical partnership with ZTE in exchange for US $10 Million. It is only on December 5, 2006 that Jose de Venecia files his AHI application with DOTC . CICT informs NEDA of the AHI proposal and that it cannot continue with its evaluation.

Jose de Venacia accompanies Abalos to Shenzhen demanding from ZTE officials the balance of his commission and that of PGMA and Speaker De venecia.Abalos informed Neri of his commission.

At a reconciliatory meeting at Wack Wack, FG Mike Arroyo shouted at Jose de Vencia III ordering him to back-offAfter several negotiations and resolutions, NEDA approves NBN-ZTE project.

President Arroyo grants Sec. Mendoza full powers to sign NBN project contract with ZTE. DOCT opines that no public bidding is requires on the NBN projectbased on the exchange of notes between the GRP and PROC. PGMA first learned of irregularities in the US$329 million ZTE broadband contract. She knew it was overpriced. The signing of the contract was witnessed by PGMA

After reports and information disclosed, Senate blue Ribbon Committee began its investigation, PGMA suspends the NBN ZTE Project. Abalos resigned from COMELEC. Jose de venecia was ousted as the Speaker of the House. Jun Lozada refsurfaces.

FINDINGS OF THE BLUE RIBBON COMMITTEE

4.1 President Gloria Macapagal-Arroyo allowed ZTE to win the NBNproject, even if at the initial stages she spoke as if she wanted aprivate Build Operate and Transfer (BOT), no sovereign guaranty,"pay as you use" broadband.

Acts of all of President Arroyo's alter egos: Former Presidential Chief of Staff Michael Defensor, Chairman Neri and Secretaries Favila and Mendoza are within her complete control and supervision. Moreover, the direction that NEDA took in approving the NBN-ZTE contract was also under her control as Chairperson of NEDA. In spite of the fiflct that she knew about the P200 million bribe offer related to her by Secretary Neri and in spite of the fact that she knew that there were anomalies in the contract the night before the signing with ZTE, she proceeded to China to witness the signing of the contract. It is worth noting however that the contract was not government to government but was merely a contract with a private company.

Former Comelec Chairman Benjamin Abalos shamelessly brokeredthe approval of the ZTE contract. His lobbying efforts wereconfirmed by Chairman Neri, Mr. de Venecia III, Engineer Lozada,

Secretary Teves, Secretary Mendoza, and Mr. Leo San Miguel

Chairman Abalos was pulling all the strings in government for ZTE to secure the NBN contract. Chairman Abalos had a big stake in the NBN deal and it could only have been financial or pecuniary in nature. He was more interested in getting the contract than in doing his COMELEC duties. This is a pure case of graft and corruption. He really offered a bribe of P200 Million to Chairman Neri, then he should also be charged with violation of Article 212 of the Revised Penal Code on Corruption of Public Officials.

Mr. Jose de Venecia III is bound by the prohibition in Section 5 ofRepublic Act No. 3019 prohibiting a relative of the Speaker of the Houseup to the 3rd civil degree from intervening directly or indirectly in anybusiness, transaction, contract or application with the Government

He even asked his general manager at AHI, Ernesto Garcia, to draft a letter of endorsement for Secretary Mendoza to sign- so that AHI could secure the contract. Mr. de Venecia III a rent-seeker clearly using with impunity, the influence of his father's office as leverage in order to win a lucrative government contract. He even admitted that there could have been a partnership between AHI and ZTE. It only fizzled out because of the alleged US $ 130 Million over price

First Gentleman Arroyo intervened- improperly- when he allegedly toldMr. de Venecia III to back off from the NBN project.

First Gentleman Mike Arroyo, as the President's spouse, is prohibited by Section 5 of Republic Act No. 3019 from intervening directly or indirectly in any business, transaction, contract or application with the Government. By attending that meeting at the Wack Wack Golf and Country Club and telling Mr. de Venecia III to back off, he actively intervened in a government contract in violation of this prohibition. It was also alleged by Mr. de Venecia III and Engineer Lozada that the First Gentleman was to receive a kickback from ZTE in the amount of US$70 million.

It should be remembered that Engineer Lozada said that his involvement in the NBN-ZTE deal startep when Secretary Neri introduced him to Chairman Abalos at the Wack Wack Golf and Country Club where they met with Ruben Reyes, Leo San Miguel and ZTE representatives Fan Yang and Yu Yong. He was a co-conspirator from the start who chose to confess and tell what he knows when things got to hot to handle.

Secretary Atienza and then Deputy Executive Secretary Gaiteconspired with Engineer Jun Lozada to prevent the latter fromtestifying in the Senate.

Deputy ExecutiVe Secretary Gaite even generously gave P500, 000 of hisalleged "personal" money so that Mr. Lozada will have something to spend in HongKong.

In this particular instance, not only did the Philippine government allow the Chinese government indicate a single supplier, this supplier alsodictated a price that was overpriced by US$130 Million compared tothe unsolicited proposals of other suppliers.

The NBN-ZTE investigations revealed that the root of the problem was not only the procurement of supplies and services but the contract as well. As a result of the present ODA Act, lending countries earns twice from us: First, through the interest of the loan for a particular project; second, through supplies and services rendered for such project, which they exclusively supply. In this case, the Chinese government did not only specify that the supplier is from China but it names the supplier. The Philippine government, even if forced with this situation should' have suggested that different suppliers be mentioned so there is a choice. It should not have just accepted the designation lock, stock, and barrel.

The NBN Project is not exempt from competitive bidding required bySection 4 of RA 9184 even if the Supply Contract is classified as an

Executive Agreement.

The Government Procurement Reform Act requires public bidding In allprocurement of infrastructure, goods and services. Section 10, Article IV of the Government Procurement Reform Act provides: "Section 10.

Competitive Bidding – All procurement shall be done through Competitive Bidding, except as provided for in Article XVI of this Act." In addition, Section 4 of the Government Procurement Reform Act provides that the Act applies to government procurement "regardless of source of funds, whether local or foreign." Hence, the requirement of public bidding applies to foreign-fundedcontracts like the ZTE Supply Contract. The Executive Department admits that there was no public bidding for the ZTE Supply Contract. They claim that the ZTE Supply Contract, being part of an executive agreement, is exempt from public bidding